Governance
The policy of the Board is to manage the affairs of the Company in accordance with the principles underlying the Combined Code on Corporate Governance.
PRINCIPLES OF THE COMBINED CODE ON CORPORATE GOVERNANCE
The Board of Directors
The Group is led and controlled by a Board comprising the Executive Chairman and Chief Executive Officer, three Non-Executive Directors and two Executive Directors.
There are no matters specifically reserved to the Board for its decision, although board meetings are held on a regular basis, outside of the UK, and effectively no decision of any consequence is made other than by the directors. All directors participate in the key areas of decision-making, including the appointment of new directors, through the Remunerations and Appointments Committee.
The Board is responsible to shareholders for the proper management of the Group. A statement of directors’ responsibilities in respect of the financial statements is set out on Page 14. The Non-Executive Directors have a particular responsibility to ensure that the strategies proposed by the Executive Directors are fully considered.
To enable the Board to discharge its duties, all Directors have full and timely access to all relevant information.
There is no agreed formal procedure for the Directors to take independent professional advice at the Group’s expense, however, independent professional advice is made available where considered appropriate.
All Directors submit themselves for re-election at the Annual General Meeting at regular intervals. There are no specific terms of appointment for Non-Executive Directors.
Board Committees
The following committees, which have written terms of reference, deal with specific aspects of the Group’s affairs.
The Remuneration and Appointments Committee
The Remuneration and Appointments Committee is responsible for making recommendations to the Board on the Company’s framework of Executive remuneration and its cost. The Committee determines the contract terms, remuneration and other benefits for each of the Executive Directors and for other senior members of management and is advised, as necessary, by a leading firm of recruitment consultants. The Committee comprises two Non-Executive Directors.
The Audit Committee
The Audit Committee is comprised of two Non-Executive Directors. Its primary tasks are to review the half-yearly and annual accounts before they are presented to the Board, focusing in particular on accounting policies and areas of management judgement and estimation. The Committee is responsible for monitoring the controls which are in force to ensure the integrity of the information reported to the shareholders. The Committee acts as a forum for discussion of internal control issues and contributes to the Board’s review of the effectiveness of the Group’s internal control and risk management systems and processes. It advises the Board on the appointment of external auditors and on their remuneration for both audit and non-audit work, and discusses the nature and scope of the audit with the external auditors. The Committee assesses the performance of the external auditors as well as their independence and objectivity.
The external auditors confirm their independence each year in writing to the Committee.
The Committee, which meets at least three times per year, provides a forum for reporting by the Group’s external auditors. Meetings are also attended, by invitation, by the Finance Director and CEO.
Internal Control
The Board acknowledges its responsibility for establishing and monitoring the Group’s systems of internal control. Although no system of internal control can provide absolute assurance against material misstatement or loss, the Group’s systems are designed to provide the Directors with reasonable assurance that problems are identified on a timely basis and dealt with appropriately.
The key procedures that have been established and which are designed to provide effective control are as follows:
- Management Structure: The Board meets regularly to discuss all issues affecting the Group; and
- Investment Appraisal: The Group has a clearly defined framework for investment appraisal and approval is required by the Board where appropriate.
The Board regularly reviews the effectiveness of the systems of internal control and considers the major business risks and the control environment. No significant control deficiencies have come to light during the year and no weakness in internal financial control has resulted in any material losses, contingencies or uncertainties which would require disclosure as recommended by the guidance for directors on reporting on internal financial control.
The Board considers that in light of the control environment described above, there is no current requirement for a separate internal audit function.
Relations with Shareholders
The Executive Chairman and Chief Executive Officer and Finance Director are the Company’s principal spokespeople with investors, fund managers, the press and other interested parties. Each of the Non-Executive Directors are available to attend meetings with major shareholders (without the Executive Directors present), if requested by such major shareholders. At the Annual General Meeting, private investors are given the opportunity to question the Board.